Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Will the stratification of an apartment building in and of itself result in the conversion of the apartment building from capital property into inventory particularly where the intention of the taxpayer is not to sell the individual condominium units?
Position: Although the conversion of a capital property to inventory is always a question of fact it is likely that the mere act of stratifying an apartment building will not result in such a conversion.
Reasons: See letter referred to by the correspondent (i.e., E9302065) as well as paragraph 13 of Interpretation Bulletin 218R.
XXXXXXXXXX 2001-006896
J. E. Grisé
March 7, 2001
Dear XXXXXXXXXX:
Re: Capital Property v. Inventory
This is in reply to your letter of February 5, 2001, requesting confirmation of a previous interpretation given in a letter dated May 11, 1993 (our reference 930206) and whether the interpretation could similarly apply to the conversion of an apartment building into condominium units.
In general terms, the comments given in the 1993 letter continue to reflect our position.
You indicate that some property tax regimes provide an incentive, in the form of lower mill rates, to an apartment building owner to apply to stratify the building into individual units. You would like our view as to whether the reasoning in the 1993 interpretation would similarly apply to the stratification of an apartment building that is a capital property to the owner. Although the conversion of a capital property to inventory is always a question of fact, it is unlikely that the mere act of stratifying an apartment building will result in such a conversion.
We hope our comments are helpful.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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